Deena Katz and Harold Evensky, Next-Gen Mavens: The IA 25 2014 Profile

Katz and Evensky are answering some tough questions about the next generation and the future of the industry

Their dedication not just to the students at Texas Tech, but to the next generation of advisors puts Evensky and Katz on the IA 25 again. Their dedication not just to the students at Texas Tech, but to the next generation of advisors puts Evensky and Katz on the IA 25 again.

Between them, Deena Katz and Harold Evensky have been on the IA 25 list 13 times, which isn’t bad when you consider this is only the 12th time we’ve published the list.

Why is this husband-and-wife advisor team, leaders of the wealth management firm Evensky & Katz who teach classes and mentor students—and help graduates get actual jobs—at Texas Tech University’s Personal Financial Planning department, on the list again? Partly it’s their body of work—they’ve both been influential for years because of their intellectual capital, their early adoption of the fee-only model, their work on getting advisors recognized as a profession, their promotion of female advisors, how they’ve managed their now joint practice, how they’ve implemented a succession plan that benefits their employees and their clients and their standing among their peers.

At a stage of their careers where many advisors might be expected to slow down, both Katz and Evensky are instead doubling down on their commitment to the next generation of advisors. Ah, the next generation of advisors! Where will they come from? How can veteran advisors attract younger people to the profession they love? How will those younger people find jobs once they’ve gone through an education process that didn’t exist when the now-veterans of the profession started out? How can advisors raise the intellectual profile of a profession so that it’s treated as a profession by others, with a common body of knowledge based on rigorous academic but also practical research that meets the intellectual needs of advisors while providing real-world benefits to end clients?

These are questions that many people in the profession are talking about and, in some instances (I’m thinking of Mark Tibergien), have been warning about for years?

Well, Katz and Evensky are not just talking about those questions, they’re doing something about finding answers to all them.

In an interview with the couple in early May, Evensky agreed that all these issues “are important; they’re all critical,” and that both he and Katz “share the passion” about finding answers to these next gen questions. Katz quoted Robert Schiller, the University of Chicago academic, in saying, “We have to solve real world problems, not just do what we’ve been doing.”

Speaking in Seattle at a CFA conference, where Katz also spoke, Schiller said, “The big job ahead for finance is to attack real world problems,” with Katz herself paraphrasing Schiller's dictum: “We have to get our heads out of the sand.”

Regarding the academic underpinnings of the profession, Evensy said, “I talk to the graduate students at Texas Tech” and so much of their research “is sociological” in nature, which fails to help practitioners solve those real-world problems. Those grad students say, “As soon as I’m tenured, I’ll do practical work, too,” but Evensky and Katz want more from academic research. “We’re talking about longitudinal studies,” she said, with direction on “how to apply” the research findings to practical matters. Evensky said, “I certainly see a greater interest in our graduate students and PhDs who’ve started other” financial planning programs at universities around the country who are “looking to do much more applied research rather than theoretical.”

But that’s where the strictures of academia come into play. “Our professors in the PhD program” at Tech, Katz said, “are more interested in relevant topics, but their problem is to do it in the academic world." She said that some senior professors could do and are doing that practical work, but “the rest have to publish or perish.” She said that senior professors like Michael Finke (at Texas Tech) and Wade Pfau (at The American College) “are working on stuff that planners can use,” so there’s hope on the academic research front.

Both planners wistfully spoke of their frustration with industry associations and companies that partner with advisors for not sponsoring longer term research that would benefit advisors and clients. With those partner companies, Katz said, “we need to appeal to them to get more involved” in heavy-duty research that would have long-term benefits rather than work on quick “marketing surveys.” The reluctance of those firms to fund such research “has to do with time and control, not dollars; academic research doesn’t work that way. The industry isn’t willing to wait” to see the results of serious research.

Despite their frustration, Evensky and Katz are “both optimistic,” said Evensky, since “we have so many more Ph.D. students, and there’s a whole lot more people out there who understand what we do.” Their optimism is tempered with concerns that “we’re not getting enough people in our programs; not attracting women or more diverse groups” to those academic programs, he said, despite the fact that those students “walk out with a degree and four job offers.” But not to worry about the future: Evenksy and Katz are on the job.

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